Well folks, it looks like the inflation genie is out of the bottle. All these economic stimulus packages and bailouts will have to be paid back eventually.
Where is all the money going to come from?
Investors around the world are still standing in line to buy our short-term government securities. But China’s exports have plummeted, so they no longer have money to lend us. And oil prices have dropped sharply, so OPEC doesn’t have as much to lend us.
What happens if the world stops supporting our lavish spending habits? We will have to print more paper money to meet our crushing debt obligations. Not only could that scare investors out of the dollar and into the euro or Japanese yen… it will result in a huge jump in inflation.
So how you can profit from inflation? You can own an asset whose purchasing power has outlasted governments and civilizations for more than 5,000 years: Gold.
Gold is the best performing asset class this decade. Since 2000, gold is up more than 200 percent, and it looks like it will keep going.
Inflation decreases the value of the U.S. dollar. As the dollar goes down, the value of gold tends to go up, because gold is priced in dollars. That’s why you should be a gold bug.